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College Made Utopias 


Labor Unrest 


President Felt & Tarrant Mfft. Co. 

JUNE 24, 1919 


From the many learned discussions of 
Capital and Labor appearing in public print, 
I am forced to the conclusion that the opin- 
ions there expressed are in the main derived 
from theories founded upon academic study 
of the subject. And as I read I cannot escape 
the reflection that if these writers with all 
their power of analysis and ability to express 
their views, only had a practical knowledge of 
the subject, they could write in a way that 
would throw much light on economic in- 
dustrial questions. 

After this statement I suppose I should 
qualify as to my own practical knowledge of 
the subject. I worked for many years at the 
bench as a machinist. I have been an em- 
ployer for twenty-eight years. I have been 
quite active in public affairs. I was a member 
of the commission sent by the United States 
Department of Labor to investigate conditions 
in England and France. I am also President 
of the Illinois Manufacturers' Association. 

Much of what is said in the published 
articles is correct as far as it goes, but the 
question is usually discussed as though the 
only elements involved in modern economics 
were Capital and Labor. Neither of these is 
the most important factor. The most im- 
portant factor is the entrepreneur — that is, the- 
man who takes the risk and makes the wheels 
go round, not so much by investment of his 
money, as by giving his time and often his 
health to the intensive labor and effort which 
is sometimes referred to as "directive faculty.' * 
Such men often risk their money also. 

Modern discussion of economic and labor 
questions is usually based on the assumption 
that the issue is between "Labor and Capital." 
As far as the human interest is concerned there 
are three elements: the Entrepreneur, the 
Labor and Capital. The capital will flow into 
industry if risk and prospective profit make 
industry more attractive than safer invest- 
ments, like United States Bonds for instance. 
In the affairs of industry, commerce, trans- 
portation, etc., there are for capital all degrees 
of safety and hazard, ranging all the way from 
United States Bonds down to the exploitation 
of a new invention. The greater the risk the 
greater must be the prospective profit ; other- 
wise capital will not be obtained. The losses 
experienced by capital invested in the more 
risky enterprises probably equal the profit 
experienced by those who succeed. We for- 
get those who fail and regard only the profits 
of the successful. Yet, from an economic 
standpoint with respect to the welfare of all 
the people, it is probably true that the money 
so risked is more beneficial than the money 
invested in safer channels. 

The fourth factor affecting economic ques- 
tions in any country is natural resources. 
This is quite as important from the standpoint 
of the working man or the industrial captain 
as is either capital or labor. Abundance of 
food and abundance of minerals, such as coal, 
iron and copper, have meant as much to the 
American laboring man, as has also the will- 
ingness of American capital to invest in in- 
dustry and transportation enterprises. But 
the one indispensable factor, which countries 
like Russia, India and China, who possess 
the other three factors, need, is capable and 
enterprising entrepreneurs. England and 
America have in the past enjoyed the services 


of this class of men. Many of such men have 
built up great industries with practically no 
capital. No amount of capital and labor can 
accomplish anything unless directed by the 
capable entrepreneur, of whom there never 
has been and never will be enough in any 

Neither the entrepreneur nor the capital, 
for risky enterprises, will be forthcoming if we 
continue to talk along the line that labor is 
entitled to participation in the profits of the 
successful. The very prevalent talk of that 
kind and the discussion of "voice in manage- 
ment" in the sense that it is understood in 
America and in France, will tend to discourage 
industry and react to the disadvantage of 
labor. The same term as understood in 
England is not harmful. Certainly capital 
will not invest and capable men will not give 
their lives to the development of business if 
after they have made it a success, they must 
divide the prize with other men who have 
taken no such risk and given to it no corres- 
ponding intensive effort and exercise of genius. 
In the case of a concern which took twenty 
years without profit to build up and then in 
the harvest time is realizing a profit of one 
hundred or one thousand per cent on the 
capital invested; it would be impossible to 
convince workmen having a voice in manage- 
ment that they were not entitled to fancy 
compensation. Yet if that one thousand per 
cent, which can be realized only for a short 
time, were spread over all the unprofitable 
years of effort and risk, it would not in many 
cases be a fair return for the time of the 
entrepreneur and the money invested. As a 
matter of fact the capable entrepreneur must 
be unhampered in the conduct of his business 
either by stockholders or workmen. I am 


familiar with a case where, after seventeen 
years of inability to make any money, a 
business was split into two parts, one practi- 
cally without capital and the other with over 
a million dollars. One partner took the part 
without capital and while his associate, a 
man who had been very successful in building 
up a large business along conventional lines, 
was losing one million two hundred and 
twenty thousand dollars, the man who took 
over the business with practically no capital, 
made a million dollars; which came in very 
handy in helping the losing business to close 
up without going through bankruptcy. It 
was a big price to pay to be set free from 
"voice in management," but it was worth it. 
If it comes to a case of choosing between 
quitting or giving labor a voice in the man- 
agement of that business, in the sense that 
expression is usually understood in America, it 
is obvious what choice that manager will make. 

As for 'Voice in management" in the sense 
they understand it in England, the workmen 
in my own business have always had a voice 
in management; that is, the opportunity to 
express their desires and voice their com- 
plaints, and even more, they have always had 
the privilege of fixing the number of hours they 
should work and what hours out of the twenty- 
four the working hours should consist of. 

Due to the excitement occasioned by the 
War and the failure of workmen to realize 
that the high wages they received under 
government control involved the mortgaging 
of the future of peoples for a generation or 
more, there will be a very considerable amount 
of social unrest for some years. It cannot be 
avoided ; however, there is no danger whatever 
that the social structure of America will be 
overturned by anything like the Bolshevik. 


I do not believe there is any danger of 
revolution in any of the countries of Western 
Europe. There will be some bloodshed, that 
is the price that even we in America will have 
to pay for the pseudo economic theories 
preached by the college professors and theorists 
who have no real knowledge of the funda- 
mental factors of social and political economy. 
If those without practical knowledge of such 
matters would leave the industrial employers 
and employees alone there would be less un- 
rest and less bloodshed. They lecture the 
employer, not realizing that if the employer 
gave all his profits to labor, it would not ap- 
preciably affect the workmen's income. They 
entirely ignore the fact that in the end the 
consumer pays any increased cost of produc- 
tion and that in the main the workman is the 
consumer. I have always felt that the man 
who works with his hands does not receive his 
full share of the combined products of labor, 
capital and enterprise. But, I believe that 
nobody yet has brought forward a scheme for 
a social structure which will afford for the 
working man a greater enjoyment of the good 
things of life than our present social and in- 
dustrial system. During recent years organ- 
ized industrial workmen have enjoyed more 
than formerly but that has resulted in in- 
creasing the cost of manufactured articles 
which he consumes and also the cost of the 
products of the soil which have become more 
expensive because the good pay and conditions 
in factories draw workers away from the 
farms, thus decreasing the possible volume of 
agricultural products. No matter how we 
may fix up a broad artificial plan for increasing 
the industrial worker's compensation, the fact 
that he is dependent on capital and the en- 
trepreneur for a chance to work at all, and the 


further fact that he is the principal consumer 
in the long run, when we put it into practice, 
we will find that he is no better off in the end 
than he would have been tinder normal com- 
petitive labor conditions. 

Of course one class of labor may benefit by- 
artificial raise of wages, but in that case it is 
principally at the expense of other classes of 
workers. I believe the workmen themselves 
understand this better than the employers. 
They appreciate, and many of them state 
frankly, that it is a race between the various 
crafts to see which can boost their wages the | 
fastest. They also now realize, as never be- 
fore, especially in England, that workers in 
some countries have in the past by restriction 
of output, put themselves out of employment 
instead of making employment for a greater 
number of toilers, due to the inability of the 
employer to compete with manufacturers of 
other countries in producing articles the cost 
of which is principally labor. 

The workman is not wholly to blame for 
the present industrial unrest. There are some 
"stand pat" employers. There is about as 
much fault on one side as on the other, and 
there always will be friction. Some employers 
in some industries cannot afford the liberal 
treatment of employees which others easily 
practice. The employees in some countries 
can never experience the prosperity which 
those in other countries enjoy because of the I 
difference in natural resources and captains 
of industry and commerce. 

Agitation and revolution will accomplish 
nothing in the way of relieving those dis- 
advantageous^ situated. If they would emi- 
grate and pioneer places on the earth suitable 
for white people, they would accomplish 
something for the general benefit of mankind. 


The hardy and brave people who pioneered 
America did a thousand times more for man- 
kind that did both the French Revolutions. 
The course which revolutions run usually, is a 
beginning consisting of the introduction of 
moderate measures put forth by theorists for 
the benefit of the poor and which in practice 
leave the poor worse off than before. The 
next step is something more radical and the 
revolution proceeds through successive steps, 
each more radical than the former until con- 
ditions become unbearable and autocracy is 
welcome, and then society begins to rebuild on 
conservative lines directed by an autocrat. 
I believe that the intelligence of the common 
people in America and Western Europe is 
sufficient to check Bolshevism before recon- 
struction of society has progressed very far. 
If the theorist would leave the workmen alone 
there would be very little trouble. The out 
and out radicals are not very dangerous unless 
they have a foundation of theoretical preach- 
ing furnished by supposedly disinterested and 
enlightened authorities. I hold no brief for 
the labor union official, but I know that often 
he is more enlightened on economic subjects 
and more reasonable than the average em- 
ployer or college professor. 

Most employers are too busy and their time 
is too valuable to society to be spent on 
academic study of sociological questions. 
When the theorists mix in, they usually make 
a mess of it. 

In all these questions remember, that there 
will never be enough successful employers for 
the good of society; that in the matter of 
living conditions the desires and needs of man- 
kind are unlimited and that the condition of 
the working man in any country, occupation 
or time, is only comparative. At the present 


time the conditions of various classes of 
workers are very unequal. This is due to two 
causes, first the labor unions have artificially 
benefited certain classes of workers at the 
expense of others, and second, the War has. 
done the same thing. At the present time 
the French continually repeat the proverb, 
"La guerre c'est la misere de quelques-uns et 
la fortune d'autres." Also remember that 
there will be no more to divide than is pro- 
duced; that the cost of articles of consumption 
will be in proportion to the cost and abund- 
ance of production; that where the wages of 
any class have already been artificially raised 
above the normal, a further raise is an in- 
justice to other classes of workmen; that 
agitation discourages industry and the effect 
is a less production and consequently a higher 
living cost and less opportunity for employ- 

Today the working man should pray to be 
spared from the injury which he will sooner 
or later suffer as a consequence of the activi- 
ties of his theoretical friends.